Question # 4 The hot pretzel stands operating in New York City are considered to be...
Question # 4 The hot pretzel stands operating in New York City are considered to be an example of a perfectly competitive market. Suppose that there are 10,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average total cost curve. The market demand curve for pretzels slopes downward and the market for pretzels is in long-run equilibrium.
a. Draw the current equilibrium, using graphs for the entire market and for an individual pretzel stand.
b. Suppose that now New Yorkers do not like pretzels as much and they buy less. What effect will this action have on the market and on an individual stand that is still operating? Draw graphs to illustrate your answer.
c. Given the result in part (b) above, describe the process that would occur in this perfectly competitive market to bring it to a stable, long-run position. Use the same graphs as before to illustrate your answer.
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Question # 4 The hot pretzel stands operating in New York City
are considered to be...
Mer of Cana- 1000 hot-pretzel stands operating in muustry? 9. Suppose there are 1000 hot-pretzel stands...
Mer of Cana- 1000 hot-pretzel stands operating in muustry? 9. Suppose there are 1000 hot-pretzel stands oper Toronto. Each stand has the usual U-shaped aver total-cost curve. The market demand curve for pret- zels slopes downward, and the market for pretzels is in long-run competitive equilibrium. a. Draw the current equilibrium, using graphs for the entire market and for an individual pretzel stand. b. Now the city decides to restrict the number of pretzel-stand licences, reducing the number of stands...
Monopolistic Competition Suppose a perfectly competitive market for hot-dog stands in New York City changes when gourme...
Monopolistic Competition Suppose a perfectly competitive market for hot-dog stands in New York City changes when gourmet, discount, and ethnic hot-dog retailers show up, making each cart slightly different. With the inclusion of the new vendors, hot-dog stand owners are now engaged in monopolistic competition. If hot dogs from different stands are imperfect substitutes and there are numerous carts in the city, compare the producer and consumer surplus and total social welfare before and after the change.
The market for hot dogs on the streets of New York City can be considered close...
The market for hot dogs on the streets of New York City can be considered close to a perfectly competitive market. Because there are so many individuals buying and selling hot dogs: there is a shortage of hot dogs. there is a surplus of hot dogs. market forces set the price in the market. firms are able to make large economic profits. firms cannot make positive accounting profits.
Consider a city that has cell phone case stands operating throughout the midtown area. Suppose each...
Consider a city that has cell phone case stands operating throughout the midtown area. Suppose each vendor has a marginal cost of $5.00 per case and no fixed cost. Suppose the maximum number of cell phone cases that any one vendor can sell is 70 per day. If the price of a cell phone case is $15.00, how many cases does each vendor want to sell? B. If the industry is perfectly competitive, will the price remain $15.00 per case?...
3. Suppose the market for rolled oats is perfectly competitive and is in a long-run equilibrium....
3. Suppose the market for rolled oats is perfectly competitive and is in a long-run equilibrium. For the following. be sure to carefully label your graphs and use subscripts as we have done in class! You can give your answers for each part on the same graphs. a. Draw the graphs below that illustrate the market and a representative firm in the initial long-run equilibrium (use the subscript 1 to denote each curve). What profits is the representative firm earning?...
Part A. Some firms in the agricultural industry can be considered to be operating in an...
Part A. Some firms in the agricultural industry can be considered to be operating in an almost perfectly competitive market. Draw a graph showing market supply, market demand, and equilibrium price and quantity for an agricultural product of your choice. Draw a corresponding graph for an independent farm using the market equilibrium price and marginal cost curve. If you line up the two graphs horizontally, the equilibrium price should be the same on both graphs. Part B. Now suppose that...
Consider the daily market for hot dogs in asmall city. Suppose that this market is...
Consider the daily market for hot dogs in a
small city. Suppose that this market is in long-run competitive
equilibrium with many hot dog stands in the city, each one selling
the same kind of hot dogs. Therefore, each vendor is a price taker
and possesses no market power. The following graph shows the demand (D) and supply curves (S = MC) in the market for hot dogs. Place the black point (plus symbol) on the graph to indicate the market price...
We were unable to transcribe this imageNow, assume that one of the hot dog stands successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This fir...
We were unable to transcribe this imageNow, assume that one of the hot dog stands successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog stands in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this...
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual...
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual firm earning an economic profit, including MR, MC, AVC, and ATC. On the second, show the short-run market equilibrium price and quantity. Explain how the industry supply curve and the market equilibrium price and quantity are determined. 2. What is the relationship between the price on the two graphs? Why does this relationship exist? 3. Explain why a firm in a perfectly competitive industry...
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the...
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal-cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D),...
Mer of Cana- 1000 hot-pretzel stands operating in muustry? 9. Suppose there are 1000 hot-pretzel stands oper Toronto. Each stand has the usual U-shaped aver total-cost curve. The market demand curve for pret- zels slopes downward, and the market for pretzels is in long-run competitive equilibrium. a. Draw the current equilibrium, using graphs for the entire market and for an individual pretzel stand. b. Now the city decides to restrict the number of pretzel-stand licences, reducing the number of stands...
Monopolistic Competition Suppose a perfectly competitive market for hot-dog stands in New York City changes when gourmet, discount, and ethnic hot-dog retailers show up, making each cart slightly different. With the inclusion of the new vendors, hot-dog stand owners are now engaged in monopolistic competition. If hot dogs from different stands are imperfect substitutes and there are numerous carts in the city, compare the producer and consumer surplus and total social welfare before and after the change.
3. Suppose the market for rolled oats is perfectly competitive and is in a long-run equilibrium. For the following. be sure to carefully label your graphs and use subscripts as we have done in class! You can give your answers for each part on the same graphs. a. Draw the graphs below that illustrate the market and a representative firm in the initial long-run equilibrium (use the subscript 1 to denote each curve). What profits is the representative firm earning?...
We were unable to transcribe this imageNow, assume that one of the hot dog stands successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog stands in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this...
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal-cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D),...
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